Nevada Contractor License Bonds

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about Nevada contractor license bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

 

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What Is a Contractor License Bond?

A Nevada contractor license bond is a contractor’s guarantee to comply with all applicable state laws and regulations governing construction work. Its purpose is to protect the state against liability for financial harm caused by licensed contractors who commit regulatory violations.

 

Who Needs One?

To operate legally in Nevada, all contractors must be licensed by the Nevada State Licensing Board. Purchasing a Nevada contractor license bond is a prerequisite for licensure. The required bond amount is determined by the Board (the “obligee” requiring the bond) based on the type of license, monetary limit, level of financial responsibility, and the experience and character of the contractor (the “principal” purchasing the bond). That amount can be as little as $1,000 or as much as $500,000.

How Does a Contractor License Bond Work?

There are three parties to a Nevada contractor license bond: the obligee, the principal, and the bond’s guarantor, known as the “surety.”

A principal’s violation of the terms of the surety bond agreement that results in a financial loss can result in the injured party filing a claim against the bond. The surety investigates every claim and determines whether it is valid. The principal is legally obligated to pay every valid claim up to the full amount of the bond. But that doesn’t mean the principal will send a check to the claimant.

The surety, as the bond’s guarantor, typically will pay a valid claim initially and then be repaid by the principal. The surety’s payment to the claimant is actually an extension of credit to the principal, which, like any loan, must be repaid by a certain date. Failing to repay the debt on schedule can result in the surety taking legal action against the principal.

How Much Does It Cost?

Two factors go into calculating the annual premium for a Nevada contractor license bond—the bond amount and the premium rate set by the surety through an underwriting process. The biggest underwriting concern is the risk the surety will take on in agreeing to guarantee the bond and extend credit to the principal. That risk is measured primarily on the basis of the principal’s personal credit score.

A high credit score suggests that the risk to the surety is low, which deserves a low premium rate. However, a low credit score indicates a higher risk level, which warrants a higher premium rate. A well-qualified principal usually pays a premium rate between 1% and 3%.

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Continue below to learn more about Nevada contractor license bonds. If you have additional questions or want to explore bonding solutions for your business, speak with one of our knowledgeable surety bond experts.

 

CONTACT US FOR A

FREE CONSTRUCTION BOND QUOTE

What Is a Contractor License Bond?

In California, contractor license bonds, also referred to simply as contractor bonds are a requirement for obtaining a license to operate as a contractor within the state. They provide protection for the state against liability for any financial harm that state-licensed contractors cause their clients. A contractor license bond is a contractor’s pledge to obey the State Contractor’s License Law.

 

To operate legally in Nevada, all contractors must be licensed by the Nevada State Licensing Board. Purchasing a Montana contractor license bond is a prerequisite for licensure. The required bond amount is determined by the Board (the “obligee” requiring the bond) based on the type of license, monetary limit, level of financial responsibility, and the experience and character of the contractor (the “principal” purchasing the bond). That amount can be as little as $1,000 or as much as $500,000.

There are three parties to a Nevada contractor license bond: the obligee, the principal, and the bond’s guarantor, known as the “surety.”

A principal’s violation of the terms of the surety bond agreement that results in a financial loss can result in the injured party filing a claim against the bond. The surety investigates every claim and determines whether it is valid. The principal is legally obligated to pay every valid claim up to the full amount of the bond. But that doesn’t mean the principal will send a check to the claimant.

The surety, as the bond’s guarantor, typically will pay a valid claim initially and then be repaid by the principal. The surety’s payment to the claimant is actually an extension of credit to the principal, which, like any loan, must be repaid by a certain date. Failing to repay the debt on schedule can result in the surety taking legal action against the principal.

Two factors go into calculating the annual premium for a Nevada contractor license bond—the bond amount and the premium rate set by the surety through an underwriting process. The biggest underwriting concern is the risk the surety will take on in agreeing to guarantee the bond and extend credit to the principal. That risk is measured primarily on the basis of the principal’s personal credit score.

A high credit score suggests that the risk to the surety is low, which deserves a low premium rate. However, a low credit score indicates a higher risk level, which warrants a higher premium rate. A well-qualified principal usually pays a premium rate between 1% and 3%.

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